Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion set forth below, as well as other portions of this Quarterly Report, contain statements concerning potential future events. Such forward-looking statements are based upon assumptions by management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by the Company. Readers can identify these forward-looking statements by their use of such verbs as expects, anticipates, believes or similar verbs or conjugations of such verbs. If any of the Company’s assumptions prove incorrect or should unanticipated circumstances arise, actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in Part II, Item 1A of this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December 25, 2021. This report has been filed with the Securities and Exchange Commission (the “SEC” or the “Commission”) in Washington, D.C. and can be obtained by contacting the SEC’s public reference operations or obtaining it through the SEC’s website at http://www.sec.gov. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. The Company will not update any forward-looking statements in this Quarterly Report to reflect future events or developments.

The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 25, 2021. Unless the context otherwise requires, references in this document to "we", "us", "our" and similar terms refer to Garmin Ltd. and its subsidiaries.

Unless otherwise indicated, amounts set forth in the discussion below are in thousands.

Company Overview

The Company is a leading worldwide provider of wireless devices, many of which feature Global Positioning System (GPS) navigation, and applications that are designed for people who live an active lifestyle. We are organized in the six operating segments of fitness, outdoor, aviation, marine, consumer auto, and auto OEM. The operating segments offer products through our network of subsidiary distributors and independent dealers and distributors, our own webshop, as well as through various auto, aviation, and marine original equipment manufacturers (OEMs). Each of the operating segments is managed separately.

Business Environment Update

Intensifying headwinds including high inflation, rising interest rates, and the strengthening of the U.S. Dollar relative to other major currencies have led to uncertainty in the economic environment. Additionally, while our global supply chain is routinely subject to component shortages, increased lead times, cost fluctuations, and logistics constraints, these factors have been further amplified by the current environment, including Russia’s invasion of Ukraine and the lingering impacts of the COVID-19 pandemic. We expect these economic and supply chain challenges to persist through at least the end of 2022.

While Russia’s invasion of Ukraine has not had a material direct impact on our business, and our related exposure is limited, the nature and degree of the effects of that conflict, as well as the effects of the current economic environment over time remains uncertain. Refer to Part II, Item 1A, “Risk Factors” of this Quarterly Report for further discussion of the risks and uncertainties facing our Company.

Results of Operations

As indicated in Note 1 to the condensed consolidated financial statements, in the first quarter of fiscal 2022 the Company refined the methodology used in classifying certain indirect costs as research and development expense, which we believe provides a more meaningful representation of costs incurred to support research and development activities.

Additionally, as indicated in Note 1 and Note 4 to the condensed consolidated financial statements, in the first quarter of fiscal 2022 the methodology used to allocate certain selling, general, and administrative expenses to the segments was refined to allocate these expenses in a more direct manner to provide the Company’s CODM with a more meaningful representation of segment profit or loss. The Company’s composition of operating segments and reportable segments did not change.

These changes in classification and allocation had no effect on the Company’s consolidated operating or net income. The amounts presented below for selling, general, and administrative expense, research and development expense, segment operating expense, and segment operating income for the 13-week and 26-week periods ended June 26, 2021 have been recast to conform with the current period presentation.

Comparison of 13-Weeks ended June 25, 2022 and June 26, 2021

Net Sales

Net Sales		13-Weeks Ended June 25, 2022				Year-over-Year Change				13-Weeks Ended June 26, 2021
Fitness		$	272,095				(34	%)		$	413,201
Percentage of Total Net Sales			22	%							31	%
Outdoor			381,915				18	%			323,405
Percentage of Total Net Sales			31	%							24	%
Aviation			204,739				13	%			180,832
Percentage of Total Net Sales			16	%							14	%
Marine			242,794				(7	%)			261,790
Percentage of Total Net Sales			20	%							20	%
Auto			139,290				(6	%)			147,677
Percentage of Total Net Sales			11	%							11	%
Consumer Auto			80,328				(7	%)			86,278
Percentage of Total Net Sales			6	%							7	%
Auto OEM			58,962				(4	%)			61,399
Percentage of Total Net Sales			5	%							5	%
Total		$	1,240,833				(6	%)		$	1,326,905

Net sales decreased 6% for the 13-week period ended June 25, 2022 when compared to the year-ago quarter. Total unit sales in the second quarter of 2022 decreased to 3,743 when compared to total unit sales of 4,303 in the second quarter of 2021, which differs from the percent decrease in revenue primarily due to shifts in segment and product mix. Outdoor was the largest portion of our revenue mix at 31% in the second quarter of 2022 compared to fitness at 31% in the second quarter of 2021.

The increase in outdoor revenue was primarily driven by strong demand for our adventure watches. Aviation revenue increased due to growth in both OEM and aftermarket product categories. Fitness revenue decreased due to declines across all product categories, driven primarily by our advanced wearables and cycling products. Marine revenue decreased primarily due to supply chain constraints that limited our ability to satisfy all demand for our products. The decrease in auto revenue was due to sales declines in both consumer auto and auto OEM products.

Gross Profit

Gross Profit		13-Weeks Ended June 25, 2022				Year-over-Year Change				13-Weeks Ended June 26, 2021
Fitness		$	134,016				(40	%)		$	225,192
Percentage of Segment Net Sales			49	%							54	%
Outdoor			253,255				22	%			208,158
Percentage of Segment Net Sales			66	%							64	%
Aviation			147,931				12	%			131,934
Percentage of Segment Net Sales			72	%							73	%
Marine			137,406				(10	%)			152,609
Percentage of Segment Net Sales			57	%							58	%
Auto			56,218				(11	%)			62,958
Percentage of Segment Net Sales			40	%							43	%
Consumer Auto			37,253				(12	%)			42,261
Percentage of Segment Net Sales			46	%							49	%
Auto OEM			18,965				(8	%)			20,697
Percentage of Segment Net Sales			32	%							34	%
Total		$	728,826				(7	%)		$	780,851
Percentage of Total Net Sales			59	%							59	%

Gross profit dollars in the second quarter of 2022 decreased 7%, primarily due to the decrease in net sales when compared to the year-ago quarter, as described above. Consolidated gross margin was relatively flat when compared to the year-ago quarter, as a stronger U.S. Dollar and higher freight costs were offset by a favorable segment and product mix.

The fitness, outdoor, marine, consumer auto, and auto OEM gross margins were adversely impacted by the strengthening of the U.S. Dollar relative to other major currencies, which created downward pressure on revenues, as well as by higher freight costs. In the outdoor segment, these impacts were more than offset by a favorable product mix.

Operating Expense

Operating Expense		13-Weeks Ended June 25, 2022				Year-over-Year Change				13-Weeks Ended June 26, 2021
Advertising expense		$	43,357				1	%		$	42,939
Percentage of Total Net Sales			3	%							3	%
Selling, General and administrative expenses			191,211				6	%			180,717
Percentage of Total Net Sales			15	%							14	%
Research and development expense			201,518				8	%			186,023
Percentage of Total Net Sales			16	%							14	%
Total		$	436,086				6	%		$	409,679
Percentage of Total Net Sales			35	%							31	%

Total operating expense increased 430 basis points and 6% in absolute dollars when compared to the year-ago quarter.

Advertising expense as a percent of revenue and in absolute dollars was relatively flat when compared to the year-ago quarter.

Selling, general and administrative expense increased 180 basis points as a percent of revenue and 6% in absolute dollars compared to the year-ago quarter. The absolute dollar expense increase in the second quarter of 2022 was primarily attributable to increased personnel related expenses and information technology costs. A decrease in fitness expense was less than the decrease in fitness sales, resulting in an increase of 640 basis points as a percent of revenue. Increases in marine, consumer auto, and auto OEM expense, along with the corresponding decreases in sales, resulted in increases as a percent of revenue of 200, 190, and 180 basis points, respectively. Outdoor and aviation expense generally increased in line with the corresponding increases in sales.

Research and development expense increased 220 basis points as a percent of revenue and 8% in absolute dollars when compared to the year-ago quarter. The absolute dollar expense increase was primarily due to higher engineering personnel costs. An increase in aviation expense was more than offset by the increase in aviation sales, resulting in a decrease of 270 basis points as a percent of revenue. Increases in fitness, marine, and consumer auto expense, along with the corresponding decreases in sales, resulted in increases as a percent of revenue of 580, 210, and 280 basis points, respectively. Auto OEM expense was relatively flat in absolute dollars and increased 230 basis points as a percent of revenue as sales declined from the year-ago quarter. Outdoor expense generally increased in line with the increase in sales.

Operating Income

Operating Income (Loss)		13-Weeks Ended June 25, 2022				Year-over-Year Change				13-Weeks Ended June 26, 2021
Fitness		$	23,462				(79	%)		$	113,733
Percentage of Segment Net Sales			9	%							28	%
Outdoor			154,250				28	%			120,843
Percentage of Segment Net Sales			40	%							37	%
Aviation			61,745				21	%			51,126
Percentage of Segment Net Sales			30	%							28	%
Marine			68,619				(25	%)			91,091
Percentage of Segment Net Sales			28	%							35	%
Auto			(15,336	)			173	%			(5,621	)
Percentage of Segment Net Sales			(11	%)							(4	%)
Consumer Auto			9,121				(44	%)			16,355
Percentage of Segment Net Sales			11	%							19	%
Auto OEM			(24,457	)			11	%			(21,976	)
Percentage of Segment Net Sales			(41	%)							(36	%)
Total		$	292,740				(21	%)		$	371,172
Percentage of Total Net Sales			24	%							28	%

Operating income decreased 21% in absolute dollars and 440 basis points as a percent of revenue when compared to the year-ago quarter. This decrease as a percent of revenue was due to a relatively flat gross margin compared to the year-ago quarter and higher expenses, while net sales declined, as described above. Auto OEM experienced an operating loss in the current quarter, and we expect this trend to continue through 2022 as we continue to invest in certain auto OEM programs.

Other Income (Expense)

Other Income (Expense)		13-Weeks Ended June 25, 2022				13-Weeks Ended June 26, 2021
Interest income		$	8,495			$	7,018
Foreign currency losses			(22,439	)			(7,326	)
Other income			170				1,195
Total		$	(13,774	)		$	887

The average interest rate returns on cash and investments during the second quarter of 2022 was 1.2%, compared to 0.9% during the same quarter of 2021.

Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of Garmin Corporation, the Euro is the functional currency of several subsidiaries, and the U.S. Dollar is the functional currency of Garmin (Europe) Ltd., although some transactions and balances are denominated in British Pounds. Other notable currency exposures include the Australian Dollar, Chinese Yuan, Japanese Yen, and Polish Zloty. The majority of the Company’s consolidated foreign currency gain or loss is typically driven by the significant cash and marketable securities, receivables and payables held in a currency other than the functional currency at a given legal entity.

The $22.4 million currency loss recognized in the second quarter of 2022 was primarily due to the U.S. Dollar strengthening against the Australian Dollar, Polish Zloty, Euro, Chinese Yuan, British Pound Sterling, and Japanese Yen, partially offset by the U.S. Dollar strengthening against the Taiwan Dollar, within the 13-week period ended June 25, 2022. During this period, the U.S. Dollar strengthened 8.3% against the Australian Dollar, 3.1% against the Polish Zloty, 3.9% against the Euro, 4.9% against the Chinese Yuan, 7.0% against the British Pound Sterling, and 9.7% against the Japanese Yen resulting in losses of $7.2 million, $5.3 million, $3.8 million, $3.0 million, $2.4 million, and $2.3 million, respectively, partially offset by the U.S. Dollar strengthening 3.5% against the Taiwan Dollar, resulting in a gain of $8.9 million. The remaining net currency loss of $7.3 million was related to the impacts of other currencies, each of which was individually immaterial.

The $7.3 million currency loss recognized in the second quarter of 2021 was primarily due to the U.S. Dollar weakening against the Taiwan Dollar, partially offset by the U.S. Dollar weakening against the Euro and the British Pound Sterling, within the 13-week period ended June 26, 2021. During this period, the U.S. Dollar weakened 2.5% against the Taiwan Dollar, resulting in a loss of $9.5 million, partially offset by the U.S. Dollar weakening 1.2% against the Euro and 0.7% against the British Pound Sterling, resulting in gains of $1.2 million and $0.4 million, respectively. The remaining net currency gain of $0.6 million was related to the impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $21.1 million in the 13-week period ended June 25, 2022, compared to income tax expense of $55.1 million in the 13-week period ended June 26, 2021. The effective tax rate was 7.6% in the second quarter of 2022, compared to 14.8% in the second quarter of 2021. The decrease was primarily due to income mix by jurisdiction and an increase in U.S. tax deductions and credits in the 13-week period ended June 25, 2022 compared to the year-ago quarter.

Net Income

As a result of the above, net income for the 13-week period ended June 25, 2022 was $257.9 million compared to $317.0 million for the 13-week period ended June 26, 2021, a decrease of $59.1 million.

Comparison of 26-Weeks ended June 25, 2022 and June 26, 2021

Net Sales

Net Sales		26-Weeks Ended June 25, 2022				Year-over-Year Change				26-Weeks Ended June 26, 2021
Fitness		$	492,992				(32	%)		$	721,326
Percentage of Total Net Sales			20	%							30	%
Outdoor			766,519				32	%			579,859
Percentage of Total Net Sales			32	%							24	%
Aviation			379,505				7	%			354,721
Percentage of Total Net Sales			16	%							15	%
Marine			496,863				5	%			471,163
Percentage of Total Net Sales			21	%							20	%
Auto			277,617				2	%			272,163
Percentage of Total Net Sales			11	%							11	%
Consumer Auto			145,458				(2	%)			148,673
Percentage of Total Net Sales			6	%							6	%
Auto OEM			132,159				7	%			123,490
Percentage of Total Net Sales			5	%							5	%
Total		$	2,413,496				1	%		$	2,399,232

Net sales increased 1% for the 26-week period ended June 25, 2022 when compared to the year-ago period. Total unit sales in the first half of 2022 decreased to 7,182 when compared to total unit sales of 7,763 in the first half of 2021, which differs from the increase in revenue primarily due to shifts in segment and product mix. Outdoor was the largest portion of our revenue mix at 32% in the first half of 2022 compared to fitness at 30% in the first half of 2021.

The increase in outdoor revenue was primarily driven by strong demand for our adventure watches. Aviation revenue increased due to growth in both OEM and aftermarket product categories. Marine revenue increased due to growth across multiple product categories, led by strong demand for our sonar products. The increase in auto revenue was due to sales growth in auto OEM products, partially offset by sales declines in our consumer auto products. Fitness revenue decreased due to declines across all product categories, driven primarily by our advanced wearables and cycling products.

Gross Profit

Gross Profit		26-Weeks Ended June 25, 2022				Year-over-Year Change				26-Weeks Ended June 26, 2021
Fitness		$	240,205				(40	%)		$	398,737
Percentage of Segment Net Sales			49	%							55	%
Outdoor			500,751				32	%			379,833
Percentage of Segment Net Sales			65	%							66	%
Aviation			275,474				7	%			258,116
Percentage of Segment Net Sales			73	%							73	%
Marine			265,987				(3	%)			273,989
Percentage of Segment Net Sales			54	%							58	%
Auto			108,889				(3	%)			111,732
Percentage of Segment Net Sales			39	%							41	%
Consumer Auto			68,213				(8	%)			74,225
Percentage of Segment Net Sales			47	%							50	%
Auto OEM			40,676				8	%			37,507
Percentage of Segment Net Sales			31	%							30	%
Total		$	1,391,306				(2	%)		$	1,422,407
Percentage of Total Net Sales			58	%							59	%

Gross profit dollars in the first half of 2022 decreased 2% and consolidated gross margin decreased 160 basis points when compared to the year-ago period, primarily due to higher freight costs and the strengthening of the U.S. Dollar relative to other major currencies, which created downward pressure on revenues.

The fitness, outdoor, marine, and consumer auto gross margins were adversely impacted by higher freight costs and a stronger U.S. Dollar. In the outdoor segment, these impacts were partially offset by a favorable product mix.

Operating Expense

Operating Expense		26-Weeks Ended June 25, 2022				Year-over-Year Change				26-Weeks Ended June 26, 2021
Advertising expense		$	77,490				5	%		$	74,000
Percentage of Total Net Sales			3	%							3	%
Selling, General and administrative expenses			381,995				8	%			352,705
Percentage of Total Net Sales			16	%							15	%
Research and development expense			410,524				10	%			374,871
Percentage of Total Net Sales			17	%							16	%
Total		$	870,009				9	%		$	801,576
Percentage of Total Net Sales			36	%							33	%

Total operating expense increased 260 basis points as a percent of revenue and 9% in absolute dollars when compared to the year-ago period.

Advertising expense as a percent of revenue was relatively flat when compared to the year-ago period and increased 5% in absolute dollars. The absolute dollar increase was primarily attributable to increased spend on tradeshows.

Selling, general and administrative expense increased 110 basis points as a percent of revenue and 8% in absolute dollars when compared to the year-ago period. The absolute dollar increase in the first half of 2022 was primarily attributable to increased personnel related expenses and information technology costs. An increase in outdoor expense was more than offset by the increase in outdoor sales, resulting in a decrease of 140 basis points as percent of revenue. Consumer auto expense increased, while consumer auto sales decreased, resulting in a 160 basis point increase in expense as a percent of revenue. A decrease in fitness expense was less than the decrease in fitness sales, resulting in an increase of 660 basis points as a percent of revenue. Aviation, marine and auto OEM expense generally increased in line with the increase in sales.

Research and development expense increased 140 basis points as a percent of revenue and 10% in absolute dollars when compared to the year-ago period. The absolute dollar increase was primarily due to higher engineering personnel costs. An increase in outdoor expense was more than offset by the increase in outdoor sales, resulting in a decrease of 120 basis points as percent of revenue. A decrease in auto OEM expense, along with the increase in auto OEM sales, resulted in a decrease of 510 basis points as a percent of revenue. An increase in marine expense was greater than the increase in marine sales, resulting in an increase as a percent of revenue of 120 basis points. Increases in fitness and consumer auto expense, along with the corresponding decreases in sales, resulted in increases as a percent of revenue of 630 and 300 basis points, respectively. Aviation expense generally increased in line with the increase in sales.

Operating Income

Operating Income (Loss)		26-Weeks Ended June 25, 2022				Year-over-Year Change				26-Weeks Ended June 26, 2021
Fitness		$	24,043				(87	%)		$	184,415
Percentage of Segment Net Sales			5	%							26	%
Outdoor			303,229				42	%			212,854
Percentage of Segment Net Sales			40	%							37	%
Aviation			101,871				6	%			96,140
Percentage of Segment Net Sales			27	%							27	%
Marine			127,501				(17	%)			153,997
Percentage of Segment Net Sales			26	%							33	%
Auto			(35,347	)			33	%			(26,575	)
Percentage of Segment Net Sales			(13	%)							(10	%)
Consumer Auto			12,953				(49	%)			25,393
Percentage of Segment Net Sales			9	%							17	%
Auto OEM			(48,300	)			(7	%)			(51,968	)
Percentage of Segment Net Sales			(37	%)							(42	%)
Total		$	521,297				(16	%)		$	620,831
Percentage of Total Net Sales			22	%							26	%

Operating income decreased 16% in absolute dollars and 430 basis points as a percent of revenue when compared to the year-ago period. This decrease as a percent of revenue was due to lower gross margin and higher expenses as a percent of revenue, as described above. Auto OEM experienced an operating loss in the current period, and we expect this trend to continue through 2022 as we continue to invest in certain auto OEM programs.

Other Income (Expense)

Other Income (Expense)		26-Weeks Ended June 25, 2022				26-Weeks Ended June 26, 2021
Interest income		$	16,048			$	14,670
Foreign currency losses			(25,946	)			(15,607	)
Other Income			3,431				2,679
Total		$	(6,467	)		$	1,742

The average interest rate returns on cash and investments during the 26-week periods ended June 25, 2022 and June 26, 2021 were 1.1% and 1.0%, respectively.

Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of Garmin Corporation, the Euro is the functional currency of several subsidiaries, and the U.S. Dollar is the functional currency of Garmin (Europe) Ltd., although some transactions and balances are denominated in British Pounds. Other notable currency exposures include the Australian Dollar, Chinese Yuan, Japanese Yen, and Polish Zloty. The majority of the Company’s consolidated foreign currency gain or loss is typically driven by the significant cash and marketable securities, receivables and payables held in a currency other than the functional currency at a given legal entity.

The $25.9 million currency loss recognized in the 26-week period ended June 25, 2022 was primarily due to the U.S. Dollar strengthening against the Australian Dollar, Polish Zloty, Euro, Chinese Yuan, British Pound Sterling, and Japanese Yen partially offset by the U.S. Dollar strengthening against the Taiwan Dollar, within the 26-week period ended June 25, 2022. During this period, the U.S. Dollar strengthened 4.9% against the Australian Dollar, 8.6% against the Polish Zloty, 6.7% against the Euro, 4.9% against the Chinese Yuan, 8.4% against the British Pound Sterling, and 15.4% against the Japanese Yen resulting in losses of $6.6 million, $11.3 million, $8.9 million, $3.0 million, $2.5 million, and $3.9 million, respectively, partially offset by the U.S. Dollar strengthening 6.8% against the Taiwan Dollar, resulting in a gain of $17.1 million. The remaining net currency loss of $6.8 million was related to the impacts of other currencies, each of which was individually immaterial.

The $15.6 million currency loss recognized in the 26-week period ended June 26, 2021 was primarily due to the U.S. Dollar weakening against the Taiwan Dollar and strengthening against the Euro, partially offset by the U.S. Dollar weakening against the British Pound Sterling, within the 26-week period ended June 26, 2021. During this period, the U.S. Dollar weakened 0.8% against the Taiwan Dollar and strengthened 2.2% against the Euro, resulting in losses of $4.8 million and $9.8 million, respectively, partially offset by the U.S. Dollar weakening 2.4% against the British Pound Sterling resulting in a gain of $1.8 million. The remaining net currency loss of $2.8 million was related to the impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $45.4 million in the first half of 2022, compared to income tax expense of $85.5 million in the first half of 2021. The effective tax rate was 8.8% in the first half of 2022, compared to 13.7% in the first half of 2021. The decrease was primarily due to income mix by jurisdiction and an increase in U.S. tax deductions and credits in the first half of 2022 compared to the first half of 2021.

Net Income

As a result of the above, net income for the 26-week period ended June 25, 2022 was $469.5 million compared to $537.0 million for the 26-week period ended June 26, 2021, a decrease of $67.6 million.

Liquidity and Capital Resources

As of June 25, 2022, we had approximately $2.9 billion of cash, cash equivalents and marketable securities. We primarily use cash flow from operations, and expect that future cash requirements may be used, to fund our capital expenditures, support our working capital requirements, pay dividends, fund share repurchases, and fund strategic acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our short- and long-term projected working capital needs, capital expenditures, and other cash requirements.

It is management’s goal to invest the on-hand cash in accordance with the investment policy, which has been approved by the Company’s Board of Directors. The investment policy’s primary purpose is to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. Garmin’s average interest rate returns on cash and investments during the first half of 2022 and 2021 were approximately 1.1% and 1.0%, respectively. The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral, and in the credit performance of the underlying issuer, among other factors. See Note 8 for additional information regarding marketable securities.

Cash Flows

Cash provided by operating activities totaled $265.5 million for the first half of 2022, compared to $598.0 million for the first half of 2021. The decrease was primarily due to higher purchases of inventory associated with the Company's strategy to increase days of supply to support our increasingly diversified product lines, optimize shipping methods, and mitigate increased lead times for raw materials.

Cash used in investing activities totaled $397.2 million in the first half of 2022, compared to $198.0 million for the first half of 2021. The increase was primarily due to higher net purchases of marketable securities, as more desirable investment opportunities were available compared to the first half of 2021.

Cash used in financing activities totaled $257.0 million for the first half of 2022, compared to $215.7 million for the first half of 2021. This increase was primarily due to the purchase of treasury stock under the share repurchase plan, and higher cash dividend payments in the first half of 2022, as our declared dividend increased from $0.61 per share for the four calendar quarters beginning in June 2020 to $0.67 per share for the four calendar quarters beginning in June 2021.

Use of Cash

Operating Leases

The Company has lease arrangements for certain real estate properties, vehicles, and equipment. Leased properties are typically used for office space, distribution, and retail. As of June 25, 2022, the Company had fixed lease payment obligations of $149.3 million, with $28.2 million payable within 12 months.

Inventory Purchase Obligations

The Company obtains various raw materials and components for its products from a variety of third party suppliers. The Company’s inventory purchase obligations are primarily noncancelable. As of June 25, 2022, the Company had inventory purchase obligations of $1,142.8 million, with $854.3 million payable within 12 months.

Other Purchase Obligations

The Company’s other purchase obligations primarily consist of noncancelable commitments for capital expenditures and other indirect purchases in connection with conducting our business. As of June 25, 2022, the Company had other purchase obligations of $404.1 million, with $250.2 million payable within 12 months.

Critical Accounting Policies and Estimates

General

Our discussion and analysis of financial condition and results of operations are based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The presentation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to customer sales programs and incentives, product returns, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, and contingencies and litigation. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021. There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week and 26-week periods ended June 25, 2022.